China to Levy Differentiated Dividend Taxes on Individual Investors

 
China will start to levy differentiated dividend taxes on individual investors from January 1, 2013 according to how long the investors hold their shares, the Ministry of Finance announced on Nov. 16, 2012.

The move aims to promote the healthy development of the country's capital markets by encouraging long-term investment and curbing short-term speculation, according to a brief statement on the ministry's website.

Investors holding shares for less than a month will have to pay a 20-percent tax rate on dividends, while those holding shares for more than one month but less than one year will pay a 10-percent tax rate, according to the statement.

If shares are held longer than one year, the tax rate will be only 5 percent, the statement said.

Currently, dividend tax rates stand at 10 percent for all shareholders in China.